nCino (NCNO) Q3 2024 Earnings Call Transcript

nCino (NCNO 0.84%)
Q3 2024 Earnings Call
Nov 29, 2023, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Thank you for standing by and welcome to nCino’s third-quarter fiscal year 2024 financial results conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today’s call is being recorded.

I would now turn the call to your host, Harrison Masters, investor relations. Please go ahead.

Harrison Masters — Investor Relations

Good afternoon and welcome to nCino’s third-quarter fiscal 2024 earnings call. With me on today’s call are Pierre Naude, nCino’s chairman and chief executive officer; Greg Orenstein, chief financial officer; and Josh Glover, president and chief revenue officer. During the course of this conference call, we will make forward-looking statements regarding trends, strategies, and the anticipated performance of our business. These forward-looking statements are based on management’s current views and expectations, entail certain assumptions made as of today’s date, and are subject to various risks and uncertainties described in our SEC filings and other publicly available documents, the financial services industry, and global economic conditions.

nCino disclaims any obligation to update or revise any forward-looking statements. advance, on today’s call, we will also converse certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today’s earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call, as well as the earnings presentation on our investor relations website at investor.ncino.com. With that, I will now turn the call over to Pierre.

Pierre Naude — Chairman and Chief Executive Officer

Thank you, Harrison, and thank you for joining us this afternoon to review our third-quarter fiscal 2024 performance. We had another solid quarter despite the continued unsettled macroeconomic environment. We exceeded the high end of our revenue guidance with subscription revenues of $104.8 million, up 19% year over year; and total revenues of $121.9 million, up 16% year over year. Once again, we significantly increased profitability, posting a 17% non-GAAP operating income margin even as we continue to invest in the business, specifically in product innovation. Our positive view of the quarter reflects a number of significant product wins across the platform.

In particular, we are very excited to announce signing our first consumer lending deal with an enterprise bank in the United States, an over $200 billion institution. Over the past several quarters, we have been highlighting the progress we have made maturing our consumer lending product, and we view lending this customer for consumer lending as another validation of that momentum as well as of our overall single-platform product strategy. We also continued the strides in our U.S. mortgage business.

Our financial results ponder double-digit U.S. mortgage revenue growth even despite lower volumes of originations and an uptick in IMB churn driven by generationally high mortgage rates. These results show the benefit of cross-selling into our installed base of banks and credit unions, the differentiation of our mortgage technology, and we believe the durability of our business model. A pivotal win for our U.S. mortgage business in the quarter came with our first cross-sell to a regional bank in the U.S.

that has been using nCino for both consumer and commercial lending. Our market-leading mortgage technology advance enhances our ability to grow wallet share in an account once a customer experiences the value of our technology. These ones are the result of having our products available on a single integrated platform, and we are excited to deliver an enhanced omnichannel encounter for consumer lending in the spring, advance leveraging the technology we acquired in the SimpleNexus transaction. As our first generally available point-of-sale journey beyond mortgage, this offering will empower our consumer lending customers to deliver the exceptional point-of-sale encounter we offer for mortgage across a broad spectrum of consumer lending products. We expect this offering to advance accelerate sales for both our consumer and mortgage lending solutions.

As we continue to invent and extend the capabilities of the platform, I’m also excited by the AI capabilities being introduced through Banking Advisor, which leverages our data expertise. Over the past four years, we have been working with our customers to create a large, differentiated pool of commercial and consumer banking data including mortgage data. Today, we are well positioned to furnish valuable and actionable insights from data aggregated across our customer base and integrated into our single platform. Access to this data is a powerful enabler, and our deep-domain expertise is informing our AI strategy. The industry has taken notice of this expertise as evidenced by the over 1,200 people who registered for our initial AI webinar in September.

When available early next year, Banking Advisor will help usher in the next wave of intelligent automation delivered on a single platform for originating any loan product and opening any account type at critical decision points. Turning to our international business. In Q3, we added our largest customer to date in Japan by signing Yamaguchi Financial Group. YMfg, which occupies a top spot in the sizable regional Japanese banking market, saw an opportunity within nCino to boost the efficiency of their processes and the user encounter they offer to their customers through digital transformation, beginning with their mortgage business. We are excited about the large opportunities we see in the Japanese market and are pleased to see our investments over the past three years there bearing fruit. Despite this list of Q3 accomplishments, the selling environment does remain challenged in certain parts of our business.

Enterprise banks in particular continue to be slower signing deals, and unlike the second quarter, we did see a few deals get pushed out of the third quarter as these customers advance evaluate their budgets and the potential impact of an evolving interest rate environment on their business. Over the past few weeks, I have traveled to see customers and prospects across North America and Europe. I’ve come away from these conversations incredibly energized about our opportunity as their needs align so closely with the value proposition of nCino’s single platform and product strategy. We built this company and continue to invent our technology so the world’s best financial institutions can more efficiently run their operations on a single platform. In this environment, risk reduction and cost savings are paramount and nCino was proving efficiency and greater security while leveraging data to furnish unique insights into our customers’ businesses. As the macro environment settles down, the institutions leveraging nCino will be better positioned for market share gains, profitability, success, and longevity. Our sales pipelines, which remains healthy, reinforces we are on the right path, notwithstanding some lumpiness we have seen this year with enterprise sales opportunities.

We are excited to close the year with a strong Q4, positioning nCino for advance growth next year and beyond. Now, let me turn the call over to Josh to furnish additional details on some of the operational highlights of Q3.

Josh Glover — President and Chief Revenue Officer

Thank you, Pierre. We are pleased with our third-quarter results and the continued momentum we see in the business. On the sales front, we signed key strategic wins across market segments, geographies, and solutions. We added our largest customer to date for consumer lending in this last quarter, signing a $200 billion bank in the United States. This new customer will leverage nCino across all of their consumer lines of business with both in-branch and digital workflows to modernize their go-to-market approach.

We’re extremely proud of the work our product teams have done to enable a best-of-breed consumer lending solution for even the largest banks in the U.S. Also, in the quarter, we signed an expansion agreement with an existing regional bank customer for mortgage point of sale, bringing mortgage point of sale, consumer, and commercial lending all into a single platform for this over $35 billion bank. This is an exciting proof point for the scalability of our mortgage technology, having passed a rigorous selection process with one of our most sophisticated customers. We expect to deliver exceptional time to value with a quick go-live in the fourth quarter. Our thesis that a mortgage point-of-sale offering would resonate in our legacy bank customer base is proving out, with half of the eight new mortgage logo signed in the third quarter belonging to financial institutions. Our mortgage customer base is now 46% financial institutions on a logo basis, versus 25% at the time of the acquisition of SimpleNexus.

And our mortgage pipeline on a dollar basis is now comprised 60% of financial institutions. As interest rate pressures continue to drive consolidation of the long tail of IMBs in the industry, we are working with existing customers to see them through this downturn, and we are aggressively cross-selling into the underpenetrated banking and credit union markets. We continue to see our competitive differentiation in mortgage proven out by the market with two additional competitive takeaways this quarter. We continued seeing success with multi-solution net new deals in the quarter, including a $6 billion bank that selected nCino for commercial lending, portfolio analytics, and auto spreading; and a community bank that picked nCino for commercial and consumer lending, as well as auto spreading. A more streamlined and efficient tech stack is resonating even in the current environment as banks see vendor consolidation as a way to gain critical efficiencies across their operations. Our pipeline for solutions beyond commercial lending continues to evolve, making up half of the total pipeline as of quarter end.

Risk management is another key value proposition of our solutions that drove new business in the third quarter. We signed our largest portfolio analytics bank deal to date for commercial real estate stress testing, trends analysis, and concentrated risk reporting. We also signed our largest-ever portfolio analytics credit union deal this quarter for CECL. Turning to international markets. As Pierre noted, in Japan, our team signed a record deal with Yamaguchi Financial Group, a U.S.

$150 billion asset bank, making this our largest customer to date in Japan. This opportunity is for a mortgage use case by which prospective homebuyers can apply entirely online 24 hours a day, replacing a traditional paper process. Jointly, we see a clear expansion path across both corporate and consumer lines of business to help YMfg achieve a goal of originating all loan products from a single platform. We are pleased with the receptivity we’re seeing in the Japanese market, a SAM opportunity we size at $1.4 billion U.S. This win represents another critical lighthouse account and is still relatively new and still underpenetrated market for nCino. Lastly, we completed a near seven-figure ACV expansion deal with an existing UKI customer that first signed in fiscal 2019.

This opportunity was for corporate and institutional banking, small and medium enterprise banking, commercial pricing and profitability, ESG, and end-to-end mortgage origination. While embracing these newer offerings, this bank also extended their commitment with nCino for another five years. Our broad and diverse customer base continues to be an asset, particularly in a complex macro environment. Approximately 60% of our gross ACV bookings in the quarter came from existing customers. With 50% of platform customers now using more than one product and 25% year-over-year growth in nIQ adoption by platform customers, I cannot overstate the strategic long-term value of our customer relationships.

Looking to the fourth quarter, we remain confident in our ability to execute and are well positioned with ample pipeline coverage for a seasonally high fourth-quarter sales performance. Greg, he takes us through the financials.

Greg Orenstein — Chief Financial Officer

Thank you, Josh, and thanks, everyone, for joining us this afternoon to review our third-quarter fiscal ’24 financial results. Please note that all numbers referenced in my remarks are on a non-GAAP basis unless otherwise stated. A reconciliation to comparable GAAP metrics can be found in today’s earnings release, which is available on our website and as an exhibit to the form 8-K furnished with the SEC just before this call. To echo Pierre and Josh, I am pleased with our third-quarter financial results. Total revenues for the third quarter of fiscal ’24 were $121.9 million, an enhance of 16% year over year.

Subscription revenues for the third quarter were $104.8 million, an enhance of 19% year over year, representing 86% of total revenues. Professional services revenues were $17.2 million in the quarter, growing 1% year over year. Professional services revenue growth was impacted by pressure on bill rates even as utilization from a billable hours perspective improved year over year. As I noted during my Investor Day comments, we will continue to focus on leveraging our extensive SI ecosystem to furnish professional services to our customers and prioritize subscription over professional services revenues. Non-U.S. revenues were $23.4 million, or 19% of total revenues in the third quarter, up 48% year over year.

Subscription revenues growth outside the United States outpaced respective total revenues growth with particular strength coming from our Australia and New Zealand operations. Non-GAAP gross profit for the third quarter of fiscal ’24 was $81.1 million, an enhance of 18% year over year. Non-GAAP gross margin was 67%, compared to 65% in the third quarter of fiscal ’23. The gross margin improvement was due to efficiencies realized in our customer preserve organization while maintaining customer satisfaction ratings of 3.9, or about 98%, with five times the respondents documented versus the year-ago quarter. Non-GAAP operating income for the third quarter of fiscal ’24 was $20.4 million, compared with $2.5 million in the third quarter of fiscal 23. Our non-GAAP operating margin for the third quarter was 17%, compared with 2% in the third quarter of fiscal ’23.

This impressive bottom-line performance reflects continued operational discipline and leverage from our business model. Our non-GAAP results this quarter also include approximately $2.8 million of accrual reversals for tax equalization within sales and marketing and for certain employee benefits across the organization. Non-GAAP net income attributable to nCino for the third quarter of fiscal ’24 was $16.2 million, or $0.14 per diluted share, compared to $1.4 million, or negative $0.01 per basic and diluted share, in the third quarter of fiscal ’23. As I noted during our Investor Day, during the third quarter, we rebranded the SimpleNexus solution to nCino Mortgage, resulting in a change to the trade name Useful Life. As a result, we recorded accelerated amortization to fully amortize the remaining trade name intangible asset. The effect of this change in assess for the third quarter was an enhance in sales and marketing amortization expense of $10.1 million, or $0.09 per basic and diluted share.

The impact of this accelerated amortization expense has been excluded from our non-GAAP results. We ended the quarter with cash and cash equivalents of $105.8 million, including restricted cash. Net cash provided by operating activities was $5.9 million, compared to negative $4.1 million in the third quarter of fiscal ’23. Capital expenditures were approximately $600,000 in the quarter, resulting in free cash flow of $5.3 million for the third quarter of fiscal ’24. You will note incremental spend on the investment — on the investment line of our balance sheet and statement of cash flows and related disclosures this quarter for a $2.5 million investment in Rich Data Co, an Australia-based leading AI decisioning platform that helps banks make high-quality lending decisions efficiently and safely. We announced a partnership and reseller arrangement with RDC in February of this year and are proud to cement our relationship with this investment to enable even tighter collaboration between our two organizations.

Our remaining performance obligation, or RPO, was $917.1 million as of October 31st, 2023, compared with $919.2 million as of October 31st, 2022, with $627.6 million in the less than 24 months category, up 4% from $603.9 million as of October 31st, 2022. As you heard from Pierre and Josh, we saw great validation of our solutions across market segments, products, and geographies in the third quarter. Gross bookings in the third quarter were lower than in the second quarter, but we continue to expect gross bookings in the second half of the year to be better in the first half of the year as previously communicated. We did see elevated churn in the third quarter from IMBs in our U.S.

mortgage business of approximately $5 million of annualized subscription revenues as some IMBs struggled with mortgage rates peaking in October to the highest level in over 20 years. This level of churn exceeded our internal churn forecast by about $2.5 million. Fortunately, despite the rate pressure, we are seeing the top-performing originators earn a positive production profit as reported in the latest MBA Quarterly Mortgage Bankers Performance Report. The mortgage industry has come a long way toward rightsizing for current volumes. And with our U.S.

mortgage business continuing to take market share and grow revenues despite the interest rate pressure and elevated churn, we believe this business is very well positioned for healthy top-line growth for years to come. Churn and down-sell for the rest of the business were in line with expectations in the third quarter, but in light of the elevated IMB churn, we are adjusting our churn rate expectation for the full year to about 9% of prior-year subscription revenues, up from 6%. Although the outlook for our fourth-quarter revenues has been tempered by this heightened churn, we are increasing both the low and high end of our outlook for full-year subscription revenues guidance. Please note that this heightened churn rate of 9% also includes the impact of our relationship with one of the three customers that was acquired during the liquidity crisis ending about nine months before the expiration of their contract, which was scheduled to be in May of 2024. This event had a negative impact on deferred revenue of approximately $900,000.

Positively, we expect to preserve the other two customers that were acquired and, in fact, have already expanded our relationship into one of the acquiring banks. Turning to guidance. For the fourth quarter, we expect total revenues of $123.5 million to $125.5 million with subscription revenues of $105.5 million to $107.5 million. This guidance assumes year-over-year subscription revenues growth of 15% at the midpoint of our range. Non-GAAP operating income is expected to be approximately $15 million to $16 million and non-GAAP loss attributable to nCino per share to be between $0.11 to $0.13 for the fourth quarter. This is based upon a weighted average of approximately 115.5 million diluted shares outstanding.

For the full fiscal year ’24, we expect total revenues of $476.5 million to $478.5 million with subscription revenues of $407.5 million to $409.5 million. This full-year guidance assumes year-over-year subscription revenues growth of 18% at the midpoint of our range. We are again increasing the range of our full-year non-GAAP operating income guidance to $57.5 million to $58.5 million. Non-GAAP net income attributable to nCino per share is expected to be between $0.40 to $0.42 based upon a weighted average of approximately 115 million diluted shares outstanding. With that, we’ll open the line up for questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from the line of Adam Hotchkiss of Goldman Sachs. Your line is open.

Adam Hotchkiss — Goldman Sachs — Analyst

Great. Thanks for taking my questions. I guess to start, it would be great to get a little bit more color on how customers outside of the independent mortgage banks are responding to the evolving rate environment, in particular, some of the recent movement in rate expectations for next year. Just wondering if you’re seeing any initial changes as to how decision-makers are thinking about product prioritization or budgets.

And then, your comment on incremental scrutiny at the enterprise level, you know, whether that’s relation — in relation to Q4, or if that’s something you think reflects early indications of ’24 budgets as well. Thanks.

Pierre Naude — Chairman and Chief Executive Officer

Yeah, thanks for your question. What we’re seeing in the market is that everybody is preparing the moment the rate stabilize to actually come more aggressive to the market and to solutions appreciate ours. We see it in our pipelines. We see it in conversations with the banks.

The tentative nature of the buying persona we’re seeing today is still because of the uncertainty of the rate environment. And as soon as they see stability in that, the banks achieve the need for moving forward the transformation projects to actually be competitive. In the short run, we’re still seeing that lumpiness in the market. In the enterprise, we’re beginning to see some stabilization as that retail deal will — will show you. We’re seeing some great stuff in the pipeline around — movement in that market, but again, that final decision-making is a bit slower than what we would appreciate to see. People, a bit more tentative.

On the other hand, the pipeline is healthy, and we feel very good about it.

Adam Hotchkiss — Goldman Sachs — Analyst

That’s great. Really helpful. And then, Greg, wondering if you could just comment a bit more on the leverage this quarter. It looked appreciate it was both in sales and marketing and R&D in particular.

Just wondering, you know, where you’re seeing the lowest-hanging fruit and what you’re looking for in terms of investment discipline for ’24.

Greg Orenstein — Chief Financial Officer

Yeah, thanks, Adam. Again, as I noted, the team, you know, continues to execute well as an organization and really has embraced the shift from just pure growth prior years to profitable growth. And so, we have seen nice leverage across all of our opex lines, and you know, we’ll continue to focus on that. As we think about next year, and again, you know, consistently we say and we want to reinforce this that we’ll continue to prioritize growth.

And as we see opportunities for growth, we’re going to make sure our investments are aligned to — to capture those. Again, we still think it’s in the early days of a very large market opportunity for us. We think we’ve got a unique leadership position, and we want to make sure that we — we continue to invest in that — in that leadership position, again, across the entire platform. And again, Pierre referenced and Josh referenced in their comments that consumer lending deal, again another validation of our platform and, ultimately, what our software can do for banks on a global basis.

Adam Hotchkiss — Goldman Sachs — Analyst

OK, really helpful. Thanks, Pierre. Thanks, Greg.

Greg Orenstein — Chief Financial Officer

Thanks, Adam.

Operator

Thank you. One moment, please. Our next question comes from the line of Saket Kalia at Barclays. Your line is open.

Saket Kalia — Barclays — Analyst

OK, great. Hey, guys, thanks a lot for taking my questions here.

Pierre Naude — Chairman and Chief Executive Officer

Thank you, Saket.

Saket Kalia — Barclays — Analyst

Hey — hey, guys. Pierre, Josh, maybe this question is for you. First of all, congrats on the consumer lending enterprise win; 200 billion is certainly a very big bank. Maybe the question is, could you folks just maybe speak to — to who nCino is typically replacing in these consumer lending deals? And what do you think is sort of the catalyst for these banks to — to be considering a replacement at this juncture? Does that make sense?

Josh Glover — President and Chief Revenue Officer

Sure, Saket, I can take that. You know, that’s — that’s the thing — that’s grown a lot. And when a bank grows appreciate that and they realized they want to continue serving the consumer segment at scale, they pull back and make sure they have architectures that will continue to scale with them. A big piece of focus here was pushing more to the digital channel. If you’re working with the legacy system, as this institution was, it’s pretty hard to run an efficient operation if you have an in-house legacy system that’s dated, that’s inflexible, that can’t evolve with your business; it’s hard to add products, it’s hard to change business rules.

When you throw a digital channel on top of that, it just won’t keep up with the size of that — with the bank that size. So, for that $200 billion bank, they realized they needed to exchange probably three or four systems along the way with the nCino project. They’ll get an in-branch and digital channel that will be a lot more efficient, allow them to serve that customer base in a way customers expect to be served today. So, efficiency is a driver there. Better consolidation is a driver there.

They’re going to be very well positioned on the other side of a quick project as the economy recovers to contend.

Pierre Naude — Chairman and Chief Executive Officer

I want to add a second. I think what you’ll notice is, below the top four banks, that deposit flow toward the big four was an issue through the liquidity crisis. And every bank we talked to has a — a new renewed focus on the consumer to drive deposits because your average deposit balance of a consumer is much lower. They don’t advance it for interest rate fluctuations.

So, what you’ll find is there will be a focus on consumers in the future to have a stable and a much broader, diversified deposit base going forward. And I think you’ll see this across the whole banking sector that they have to reverse that trend of deposit flow to the big four.

Saket Kalia — Barclays — Analyst

Yeah, that’s super interesting. Greg, maybe for you for my follow-up. You know, I’ll preface by saying I know we don’t manage the business to — to RPO, you know, just since there are so many different drivers in that metric, you know, whether it’s duration or mix and others, right, that you can educate us on, but — but can you just maybe — just to make sure the question is asked, can you just speak to some of those moving parts and — and how you think about that sequential change in RPO that we saw this quarter?

Greg Orenstein — Chief Financial Officer

Yeah, Saket, thanks for noting that we don’t manage the business for RPO. We appreciate that. We’ve tried to go out of our way to make sure folks comprehend that. When you think about the different moving parts, you mentioned duration, you know, being — being one, obviously, with the churn that we noted, that’s an impact to — to RPO as well. Pierre mentioned some of the lumpiness in enterprise, particularly when you think about the over 24 months number.

As you know, those contracts with the larger customers are generally, you know, longer than the two years and the 24 months that we give them the CRPO. And so, you know, that’s where you see some of the lumpiness that we’ve been experiencing throughout the year in light of the macro environment. And then, the other thing I’d probably note is just in terms of, you know, Josh mentioned in his comments approximately 60% of our gross ACV bookings in the quarter, you know, came from existing customers. A lot of that is going to be add-on business. Generally, we will align the add-on business to, you know — to co-term with — with the agreement that’s in place.

And so, those would generally be, you know, in that shorter-duration bucket as well. And so, those would kind of be some of the moving parts. You know, on the other side, you know, things that we’ve talked about recently in terms, for example, of how we’re structuring our mortgage contracts, right, to take into account some of the growth that we expect as that market stabilizes and ultimately grows again, you know, that’s not captured in RPO either as we think about, you know, upside opportunities, you know, outside of that specific metric. So, those are the things that I would kind of highlight to you.

Saket Kalia — Barclays — Analyst

Super clear. Thanks guys. I’ll get back in queue.

Greg Orenstein — Chief Financial Officer

Thanks, Saket.

Operator

Thank you. One moment, please. Our next question comes from the line of Terry Tillman of Truist Securities. Your line is open.

Terry Tillman — Truist Securities — Analyst

Hey, good afternoon, Pierre, Greg, and Harrison. Thanks for taking my questions as well. I guess the first question — and I don’t know if this is — and, Josh. Sorry, Josh, I almost forgot you.

I don’t know if this is for Pierre or Josh, but on the retail or consumer lending side, it does seem appreciate a really important lighthouse win. What I’m curious about is — not trying to put you on the spot — 4Q, seasonally stronger bookings quarter, hopefully. But could we see rapidity here and more, you know, large wins in the offing near term? Or do you need to kind of get them up and running and they become this kind of referencable customer, and then from there, we can start knocking them down appreciate dominoes in terms of other large enterprise retail or consumer lending wins? And then, I had a follow-up.

Josh Glover — President and Chief Revenue Officer

Hey, Terry. It’s Josh. Look, the goal is to go as quickly as we can. To — to sign a $200 billion bank for a consumer lending solution, obviously, you have to go through a pretty detailed and long evaluation process.

That’s a fantastic proof point. So, if you look at the other announcements we’ve — we’ve put out even in this call, multiple community, regional financial institutions picking us for both commercial — or small business and consumer, that’s a great proof point that we’ll try to take to the market. And frankly, for a $200 billion bank to — to pull the trigger on a consumer lending deal in this environment, it shows a lot of conviction. It’s a great validation point.

So, we’re excited. So, to answer your question directly, we’re going to go as quickly as we can because — because ultimately, the scrutiny that we’ve stood up to shows that we can scale up.

Terry Tillman — Truist Securities — Analyst

Got it. Thank you, Josh. And I guess the follow-up question is, y’all recently hosted a great analyst day in terms of a lot of content — a lot of helpful content. One of the things I think we picked up from you all was the idea that ending 2Q — the ending ACV balance was up 14% year over year.

I know we have a little bit of a kind of moving part here in terms of some of the IMB churn, but do you still feel appreciate there’s — that’s kind of the floor, or is the floor a bit higher? Is there anything you can share about kind of the risk as we advance into calendar 2024 in subscription revenue, kind of what’s the low watermark? Thank you.

Greg Orenstein — Chief Financial Officer

Yeah, Terry, you know, I think we’re going to pull back on — on addressing next year. We did give you some commentary around bookings this quarter versus last quarter, as well as some commentary around how we’re looking at the second half of the year versus the first half of the year. So, I think at this point, we’ll probably leave it there, again noting that that was, you know, as we said at the Investor Day, kind of a data point and a point in time. And I think that’s something that we would really look to revisit more on an annual basis versus on a quarterly basis.

But hopefully, those data points in terms of the second half of the year over first are helpful to — in the commentary around the ample pipeline coverage that we have, are helpful in terms of how we’re thinking about Q4, and ultimately, ending the year strong.

Terry Tillman — Truist Securities — Analyst

Yeah. But, Greg, just a quick follow-up on that. 4Q, you signed business, some of this can be shorter-dated activation schedules, though, correct? So, some of the products, if you do have a strong finish, some of that could — could meaningfully show up in calendar ’24. Is that accurate at least in the second half?

Greg Orenstein — Chief Financial Officer

That is accurate, yeah. And again, as we talked about at Investor Day, you know, we’re seeing — with the mix of business with some of the pricing evolution that we’ve — that we’ve addressed, you know, we’re seeing a quicker turn from signing to revenue, you know, as upwards of 28%, 30% in the first half of the year. And compared that to the prior year, I think was around 16%. And so, you know, we expect that trend to continue. And so, again, we’ll be getting, as we go forward, more, you know, in-quarter or in-year revenue from deals that we signed in-quarter and in-year than we have in the past.

Terry Tillman — Truist Securities — Analyst

Thank you.

Greg Orenstein — Chief Financial Officer

Thanks, Terry.

Operator

Thank you. One moment, please. Our next question comes from the line of Bob Napoli of William Blair. Your line is open.

Unknown speaker — William Blair — Analyst

Hey, good evening, guys. This is [Inaudible] on for Bob. So, first question just in terms of the significant Japan win, could you kind of talk about if — how critical system integrators were, if at all, to that win? And then, more broadly, are you seeing kind of peers using a similar SI strategy in some of your core international cloud banking markets? Thank you.

Josh Glover — President and Chief Revenue Officer

Absolutely. This is Josh. The system integrators are part of that play. They have local presidents to comprehend the culture.

And we’re taking some of these institutions literally from paper straight into the cloud. So, having the local team change management expertise and scalabilities of those SIs, particularly as we extend internationally, really helps. And we’re pleased, not just about the initial proof point, but also about the way these banks are thinking about the single platform where you have banks that are starting with mortgage, some are starting with commercial, but they’re all doing it from the lens that they want to get the whole institution up on nCino.

Unknown speaker — William Blair — Analyst

Got it. And I guess one for Greg. Thinking about the long-term operating margin targets you guys laid out during the Investor Day, 35%, and that compares to the 12 or so implied from the current fiscal full-year guide. As we’re thinking about annual margin expansion cadence, should that kind of be evenly distributed or more front and back-end loaded? And what’s the visibility you kind of have around that expansion? Thank you.

Greg Orenstein — Chief Financial Officer

Yeah. We’ll hold off giving any guidance beyond, you know, this year. Again, as we look at the target, I set out a time frame of four to six years. And I think it all depends on the opportunities that we see, ultimately, the market.

But again, we’re going to err on the side of growth. And to the extent that that margin targets a little bit lower because our growth is higher as we march toward that govern of 50, you know, we’d be very happy with that. So, again, I think we’ll update you as we — as we advance along in terms of progress that we’re making, but we continue to see opportunities for leverage across the organization. Again, you see in the progress that we’ve made on our — on our margin lines as well as on our opex lines.

And I said earlier the team has done a great job, the organization has done a great job embracing the environment that we’ve been operating in.

Unknown speaker — William Blair — Analyst

Perfect. Thanks, guys.

Operator

Thank you. One moment, please. Our next question comes from the line of Adam Bergere of Bank of America. Your line is open.

Adam Bergere — Bank of America Merrill Lynch — Analyst

Hey, thanks for taking my question. Can you give some color on the deals that pushed? Is there any sort of commonality between those deals? Or, you know, thinking more in-depth on them, is there any way in which you gauge dimensionally, you know, how much that may have impacted Q3 results? And lastly, how are those deals tracking now that you’re roughly, you know, a month into Q4? Thanks.

Josh Glover — President and Chief Revenue Officer

Absolutely. Those are not deals that dropped out of the pipeline. Ultimately, sometimes, you may have wanted to get another board to look at that. Sometimes, they may learn to see how the year continued on.

They are — they are, in this interest rate environment, continue to keep a keen eye on their credit quality. They’re also thinking about their P&L as they deal with this margin compression. So, we do not see a lack of conviction on the need for transformation. We do see more — more measured investment as they think about new lines of investment for the institution.

Pierre Naude — Chairman and Chief Executive Officer

Yeah, I think it’s more a case of timing versus need. Also, we’ve not lost any of those deals to competitors. This is more a matter of let’s revisit in the budget cycle, for banks, and as soon as those are solidified, we’ll advance forward. And we see that in our pipeline movements as well.

So, we’re very optimistic that we’re going to see some of those coming through.

Adam Bergere — Bank of America Merrill Lynch — Analyst

Got it. And as a quick follow-up, have you sort of embedded that new assumption of, I don’t know, these are taking a little longer than expected into the Q4 guide? Thanks.

Pierre Naude — Chairman and Chief Executive Officer

Yes, our Q4 guide is assuming that it’s — we comprehend now very well the churn expectations in the market both on IMBs. So, we’ve taken a conservative view, and we’ve built that into the guidance that we provided.

Operator

Thank you. One moment, please. Our next question comes from the line of Alex Sklar at Raymond James line is open.

Alex Sklar — Raymond James — Analyst

Great. Thank you. Greg, outside of that — the 2 million accrual that you called out that hit sales and marketing this quarter, was there anything else one-time impacting operating income this quarter? And then, kind of on a — related to your answer about preferring growth, to a couple of the earlier questions, can you just talk about what’s being factored from a hiring or an investment perspective in fourth quarter relative to third quarter driving kind of the sequential margin refuse? Thanks.

Greg Orenstein — Chief Financial Officer

Yeah, so from — it was a $2.8 million that was really the one-time thing. The other thing I note is, in the second quarter, we had our nSight, our annual user conference, and so that’s a heavier spend. So, as you look at it on a sequential basis, you know, I would note that as well. When you look at fourth quarter, you know, it’s — the guide that we provided, you know, ultimately taking into account obviously holidays seasonality that we — that we sometimes see in the fourth quarter.

So, I think that’s what is impacting the guide if you deduct the one-times that — that I noted from the total and you look at the guide that we gave. I know there’s a small little delta there, but that’s really what it comes down to.

Alex Sklar — Raymond James — Analyst

OK, perfect. So, no major incremental hiring kind of in the year-end above and beyond kind of normal operating?

Greg Orenstein — Chief Financial Officer

No, I think, for us, it’s business as usual as we look into the fourth quarter, a big focus on obviously closing business. You know, as Josh noted and echoing Pierce comments, we have — you know, we see ample coverage from a sales pipeline perspective, and so we’re just focused on — on execution between now and the end of the fiscal year.

Alex Sklar — Raymond James — Analyst

OK, great color. And, Josh, just one for you, it seems appreciate good nIQ sales again this quarter. I heard that 25% growth in adoption. I think you flagged, though, recently that you’re seeing higher nIQ deal sizes as well.

So, any way you can kind of frame the revenue growth from nIQ? Is it meaningfully above that 25% figure?

Josh Glover — President and Chief Revenue Officer

Yeah, and the stat that we quoted was we see 25% year-over-year growth in nIQ adoption on the platform. That brings us to 34% of platform customers who have adopted nIQ to date. Also, in the quarter, we had portfolio analytics, one of our — one of our great nIQ solutions, the biggest deal we’ve ever done with the bank and the biggest deal we’ve ever done with — with a credit union. So, we’re pleased with that momentum.

Greg, do you want to speak about how that flows to revenue?

Greg Orenstein — Chief Financial Officer

Yeah, I mean, ultimately, again, as we talk about with our nIQ solutions, that turns quicker into revenue, and so we see that more quickly impacting our P&L. You know, that’s exciting as we look at the mix of business and, again, the evolution of our — of our pricing model.

Alex Sklar — Raymond James — Analyst

All right. Thank you both.

Operator

Thank you. [Operator instructions] Our next question comes from James Faucette of Morgan Stanley. Your line is open.

James Faucette — Morgan Stanley — Analyst

Great. Thank you very much. I want to dig in quickly. And I think here in the past, you’ve alluded to some inertia in the sales cycle.

Is that kind of what you’re seeing right now? And is that, you know, consistent, or is that what you’re also talking about when you say that you’ve got customers that are kind of waiting for the interest rate environment to stabilize before kind of moving ahead and making decisions?

Pierre Naude — Chairman and Chief Executive Officer

Yeah, look, we’ve got banks where profitability is down as much as 40% year over year, as announced by public institutions. And so, you can visualize, when you have that kind of environment, what they’re all looking for is stability of the future. And right now, there’s still this massive debate, is the Fed going to raise rates once more, is it going to start cutting, etc. And these have impacts both on the psychology as well as the actual results of — of banking.

And so, what we’re seeing is people are cautiously becoming optimistic but waiting to see that this stabilized environment is setting in. I don’t think they necessarily expect for the rates to start coming down. I think bankers in general believe it will be more stabilized at certain point. At the moment that stabilization is set in place, they are ready to make investments.

And you’re just seeing that level of uncertainty. In the moment that’s over, according to our pipelines and our conversations with banks, they have to do this. This is where they have to go. This is the kind of platform they need for IT simplification, modernization.

This is what the consumer wants. They need it for the deposit gathering, they need it for efficiency, they need it for compliance. So, they all know that, and we confront with them on a frequent basis. And I was just in Europe where one customer said to me, “Look, man, the project is a bit more difficult than we expected, but what else do you do?,” which, of course, is music to my ears.

So, I feel very optimistic that we are in a good strategic place. Our platform is maturing at the right time. And as these phenomenal noncommercial wins are beginning to show is that this whole architecture and effort we put in is going to pay off.

James Faucette — Morgan Stanley — Analyst

Got it, got it, got it. Thank you. Then, Greg, I know you kind of touched on this in a couple of different ways, but I just want to try make sure that we comprehend. In terms of the change in churn, if — if churn had remained stable at your — your previous assumption, you know, how much of an impact — or how would you have been changing your fourth-quarter guide at all? I’m just trying to make sure that we comprehend the level of churn impact versus other factors.

Greg Orenstein — Chief Financial Officer

It was a big part of what we saw when we rolled some of our overperformance in Q3 into Q4 in terms of upping our — upping our guidance but, ultimately, not the whole thing. And so, that certainly was — was an impact. And then, James, what we really saw was just October, I mean, you know, interest rates, and more specifically mortgage rates, peaked. And, you know, ultimately, just some of the IMBs, I think, just said enough was enough.

As we looked at the first month of — of this quarter, so far, things are more in line with — with what we expect. And obviously, this is something we’ve been tracking for the last year plus. The team has done a really good job of tracking the churn. I do think it was somewhat just, you know, a unique set of circumstances in October with that spike that really increased the — the churn level from really what our expectations were.

James Faucette — Morgan Stanley — Analyst

Got it, got it, got it. Thanks for that, Greg. Appreciate it.

Greg Orenstein — Chief Financial Officer

You bet.

Operator

Thank you. One moment, please. Our next question comes from the line of Nick Altmann of Scotiabank. Your line is open.

Nick Altmann — Scotiabank — Analyst

Awesome. Thanks, guys. It sounds appreciate there’s a lot of excitement around banking advisors. So, I wanted to ask a couple questions there.

I guess just the first one being, what is the initial customer feedback then from those who are beta testing it? Is there any sort of update on the monetization strategy there? And then, just as a follow-up, is the best way to think about the opportunity with Banking Advisor really around the installed base with — with nCino IQ? And should that really kind of foster more cross-sell activity into nIQ, or should we kind of think about those as mutually exclusive?

Josh Glover — President and Chief Revenue Officer

Hey, this is Josh. We — we’ve been pleased but not surprised by the customer excitement about this. We’ve done, I think, a really good job of meeting our customers where they are. The problems they’re really asking us to help them overcome today is helping with efficiency and also helping with employee effectiveness and employee engagement.

So, if you think about the initial use cases, where we’ll have the ability for Banking Advisor to offer a knowledge base, where a banker, rather than navigating a 300-page PDF of a credit memo, they can have that at their fingertips where they can have intelligent credit memo narratives; where rather than sitting and typing out the risks of doing a hotel loan in Florida, they can use generative AI to tell them that, look, we have seasonal risks because of tourism, we have hurricane risk, etc. So, those are things that are going to make employees a lot more efficient and, frankly, help banks. Even though the labor market is becoming a little bit more employer-friendly, it will help them attract the kind of employees that they need to continue evolving their bank because the smartest kid graduating university today does not want to go sit and thumb through a 300-page credit memo or credit policy. So, those are the kind of things that we’ve seen.

Relative to monetization, Banking Advisor is something that will contribute to nCino’s growth. And I would expect to see nIQ use cases continue to be monetized on a stand-alone basis, as you’ve heard from us, with portfolio analytics, with pricing, and profitability, but we’ll also use these tools to inject intelligence at every aspect of the application, which is a validation to continue the investment that we have and the ongoing growth that we get from our customers.

Nick Altmann — Scotiabank — Analyst

Great. And then, just a quick follow-up, you guys mentioned earlier 60% of gross ACV bookings came from the installed base in 3Q. When you look at the Q4 pipeline, how does that kind of look in terms of net new versus existing, just given it’s a seasonally strong spending quarter for software, there’s budget-flush dynamics, etc.? Thanks.

Greg Orenstein — Chief Financial Officer

Yeah, so we feel good about the pipe relative to our ability to — to deliver on the commitments that we’ve made for the fourth quarter. We’re not also not being tone-deaf on the macro and realizing that — that the buying environment is tough. So, we feel confident that we have ample coverage, 60% in0quarter from existing customers. As we’ve seen, when — when the market gets tough, our customers need us more, and we continue to focus on them. And that’s one of the benefits of having such a fantastic customer base of happy — happy customers that we — that we partnered with for years.

Composition has not changed, you know, relative to — to new deals or existing customers. As we said earlier, we’re not seeing greenfield logos fall out of the pipe. We’re just seeing a more thoughtful timeline for how they buy.

Nick Altmann — Scotiabank — Analyst

Very helpful. Thank you.

Operator

Thank you. One moment, please. Our next question comes from the line of Alex Markgraff at KBCM. Your line is open.

Alex Markgraff — KBCM — Analyst

Hey, everyone, thanks for taking the question. I actually wanted to extend on the prior question, maybe ask it a bit differently. Just thinking about that mix of — of, say, gross ACV bookings on a more normalized basis or in a more normalized environment when you consider the pent-up demand, particularly in enterprise and some of the product expansions that are helping you guide with noncommercial products, just curious, I mean 60% for the last couple of quarters from existing, what is a good range to think about for that mix from, say, existing versus new on the other side of this kind of more challenging macro environment, just considering that the changes around product and such in the last couple of years?

Pierre Naude — Chairman and Chief Executive Officer

So, historically, we run about 50-50, which is good because you cross-sell into your base with both additional products, you add more value. You upgrade them, and that gives you a bit of a pricing power as well because of your continuous innovation. And then, 50% to new logos, where you’ve got lower penetration, you can start cross-selling to them again. So, historically, we ran at 50-50.

What we saw through COVID was, when the market was destabilized, it went to a much higher percentage cross-sell into existing base customers. And what you see in this destabilized liquidity environment, it edges up to that 60%. We believe that, in the future, it’ll come back to more of a 50-50 ratio.

Alex Markgraff — KBCM — Analyst

Great. Thank you, Pierre. And then, I apologize if I missed this, but did you all furnish the sales growth metric for the quarter as you did last quarter, or not?

Greg Orenstein — Chief Financial Officer

We did not. We provided the commentary around Q3 sales bookings being lower than Q2 but still confirming that we expect the second half of the year to be greater than the first half of the year from a gross bookings perspective.

Alex Markgraff — KBCM — Analyst

OK. Thanks, Greg.

Greg Orenstein — Chief Financial Officer

Just from an — from an internal perspective, we did expect Q3 to be lower than Q2. So, I’ll note — I’ll note that just as we think about the year playing out.

Alex Markgraff — KBCM — Analyst

Got it. Thank you.

Operator

Thank you. One moment, please. One moment. Our next question comes from the line of Robert Trout of Macquarie Capital.

Your line is open.

Robert Trout — Macquarie Capital — Analyst

Hey, thanks, guys. And nice to just have my first earnings call as a — as a covering analyst with the team here. If — if I could just ask two questions. The first on the evolution of the pricing model, Greg, I know you mentioned, I think, in response to Terry’s question that, you know, the early indications from — from that migration, you’re generally seeing a quicker path to revenue.

And then, but what I’m wondering is while the employment — the federal service — financial services market is, as you mentioned, a bit more employer-friendly right now, going forward, you know, how does the job growth, or lack thereof, in the financial services market, the state of that, how — how does the new pricing model benefit or not benefit from — from changes in that relative to the old pricing model?

Pierre Naude — Chairman and Chief Executive Officer

Yeah, so let me explain. I’ll use a simple use case, for instance, consumer banking. And if I take you back to an example of airlines, 15 years ago, we all used to call the airline, make a reservation, get the ticket, if you’re lucky, through email, print it out in your printer, go to the airport, and you’ve got a paper boarding pass and a ticket with you, OK? Today, that sounds laughable. And you basically go into your phone, you book the ticket, your boarding pass sits on your telephone in the app, and boom, you go.

And you trust the system, OK? Banking, literally, is that 15 to 20 years behind. There’s still a lot of stuff that has to happen in brands; come show your driver’s license, submit some documentation, proof of employment, etc. We believe, in the next five years, that we can advance that consumer use case to a total digital end-to-end encounter that’s highly customer-friendly and fully automated. If you take that use case to that extent, it means that the employment shift in banking will advance away from personal interactions between the consumer and the banker and much more to a middle back-office exercise with people in self-service mode.

As we are going to drive that value into banking, we’re going to furnish a pricing model that is more solution and platform-based. And therefore, the bank will comprehend that they’re going to have a massive one year on the cost side from us because these banks are all growing and they can redeploy their people, OK? There will still be some back office or call center activities going on to help consumers who doesn’t get it done on their own, just appreciate an airline do. So, our pricing models will ponder that value we bring to the table, number one; and number two that it is a platform that is truly enabling the consumer to go end to end. If you go from there to small business, it’ll be more of a — a 40% fully automated, 60% banker involved.

If you go to commercial, it’ll be more highly automated processes but 100% banker involvement, OK? And that’s how we’re going to look at that across. But, yes, solution-based and platform-based pricing will become the norm in our industry.

Robert Trout — Macquarie Capital — Analyst

OK, that’s very helpful, very much, Pierre. And just on the — on the consumer side, I just want to ask sort of a broader question about sales strategy. You had this wonderful win, congratulations on that, during — during the quarter. And I think you — you alluded to, you know, the amount of time and energy that — that gets spent landing something appreciate that.

As consumer becomes and as international consumer also becomes, you know, a bigger portion of the pie, how do you think about, you know, perhaps changing your approach to your sales force, the way you train, the way you resource, and the way you evaluate them, both in terms of how they should, you know — who they should prospect, you know, what are the kind of the key metrics to evaluate them, and how they’re spending their time?

Josh Glover — President and Chief Revenue Officer

Yeah, our focus is we continue to take the single platform of these institutions as we are covering these accounts with a core account executive who maintains that relationship. This is a C-suite sale to multiple stakeholders in the C-suite, and they expect us to have that core AE who drives the relationship. And we preserve them with a robust set of experts across our various solutions who can help them tell that story to those differentiated stakeholders within the institution. For example, you heard us speak about a $35 billion bank.

They were already using us for commercial lending and consumer lending. This last quarter, they — they purchased our mortgage solution. They’re going to deliver a single platform that’s going to put them ahead of their competition. That relationship was driven by a core account executive.

But while driving in the consumer opportunity in the past, while driving in the mortgage opportunity this quarter, they had a specialist to help them. That’s the best thing for our customers. For my CFO, he does get some operating leverage with time because, in this market where, in the U.S., for example, banks are going through a period of consolidation, when I launch a new solution, I don’t — I don’t have to linearly grow my sales force, but I can thoughtfully preserve them with the specialists that they need to drive those other solutions in. So, does that answer your question?

Robert Trout — Macquarie Capital — Analyst

Yes, absolutely. Very helpful.

Pierre Naude — Chairman and Chief Executive Officer

Yeah, I can just add something to that, which is, recollect, we sell to business owners, not necessarily to IT. IT is heavily involved. They assist us in integrations and project management, etc. But those business owners want to see business value.

And what’s put nCino apart since its inception was the fact that we trained our salespeople to comprehend return on investment, comprehend how businesses will actually look at this investment they have to make, and what value that will bring. If you look at that Japanese case we talked about earlier, that’s a mortgage use case, which is very exciting because that’s a consumer use case first in a place appreciate Japan. So, across the board, our people are trained and equipped to do an ROI model and actually win the business based on a solid business case, and then with the help of IT, get it installed.

Robert Trout — Macquarie Capital — Analyst

That’s a great point. Thank you very much, Pierre.

Operator

Thank you. One moment, please. Our next question comes from the line of Saket Kalia of Barclays. Your line is open.

Saket Kalia — Barclays — Analyst

Awesome. Thanks, guys, here for — for taking my follow-up. I’m sorry to lengthen the call here, but, you know, pricing has been mentioned a couple of times here on the call. And I think there was a question earlier just around pricing, you know, in — in the retail business.

I guess I want to ask kind of a two-part question, right? So, the first one is, how much of the mortgage business is now being priced based on volume versus seats, right? And I guess the second question is, just to just to loop in that the great retail win, is there anything that you can disclose just on how the pricing structure works for that deal? You know, was there a decent volume component to it? Was it — was it mostly seat-based? Anything you could talk about on pricing here for mortgage and for that retail deal?

Pierre Naude — Chairman and Chief Executive Officer

Saket, as you know that we never want to be a pure volume business. We’ve said it from day one. That’s why we appreciate SimpleNexus. So, we always include a platform component to that.

Even when we add seat-based pricing, there is a component that is fixed as a minimum in the contract, and we appreciate that. We’ve always done that. In the soft mortgage market, we went in with lower platforms basis because that’s how you penetrate the account and they are skittish about making a massive commitment. But then on top of it, the pricing arrange is incentivizing them when volumes come back to up their minimum commitment to get a lower unit cost on volume.

So, yes, we will see some volume upsides when that market comes back. And then, there’s triggers built in where if they then commit to us a higher, lower minimum, they will actually get a lower unit cost for that volume. And that is incentivizing good behavior for both parties because we get a bigger commitment and they pay a lower unit cost price. So, that’s how we’re going to edge it up to much higher minimums again in the contracts when that market comes back.

Does that make sense?

Saket Kalia — Barclays — Analyst

Yeah, that does. That’s super helpful. And anything on that retail deal that you would call out as well?

Greg Orenstein — Chief Financial Officer

Yeah, Saket, I’ll note that that consumer lending deal did include a platform pricing. So, that’s how we structured that consistent with — again, with where we’re evolving the business and as a follow-up to the comments that I made on Investor Day, starting in consumer and moving away from that seats, particularly with the digital element to it. As Josh highlighted, you’ve got the in-branch and digital. And that’s where, again, it’s very much a value sale and what we’re able to do for the institution versus a — you know, an employee, you know, or a seat-based sale.

And so, that worked nicely. And I think as we talked about previously, we think, from a sales cycle standpoint, you know, our customers and prospects are comfortable signing business with that structure. So, we think that’s helpful in the sales cycle as well.

Saket Kalia — Barclays — Analyst

Very helpful. Thanks, guys.

Operator

Thank you. I’m showing no advance questions at this time. I’d appreciate to turn the call back over to Pierre Naude for any closing remarks.

Pierre Naude — Chairman and Chief Executive Officer

Thank you, operator, and thank you, everyone, for attending our call today, and thank you for your insightful questions. We are excited about the business. We’ve got a great pipeline with good coverage. We are considering all factors in the current market as we give you guidance for the future, and hopefully, you can see our confidence in our strategy, as well as our customer relations and our customer set that we get from our clients.

So, thank you very much. Until next time. Have a great day.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Harrison Masters — Investor Relations

Pierre Naude — Chairman and Chief Executive Officer

Josh Glover — President and Chief Revenue Officer

Greg Orenstein — Chief Financial Officer

Adam Hotchkiss — Goldman Sachs — Analyst

Saket Kalia — Barclays — Analyst

Terry Tillman — Truist Securities — Analyst

Unknown speaker — William Blair — Analyst

Adam Bergere — Bank of America Merrill Lynch — Analyst

Alex Sklar — Raymond James — Analyst

James Faucette — Morgan Stanley — Analyst

Nick Altmann — Scotiabank — Analyst

Alex Markgraff — KBCM — Analyst

Robert Trout — Macquarie Capital — Analyst

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